Watch and learn: Lessons for the Aim market

Daniel Bellau
A student at the 'Republica de Paraguay' elementar
Aim companies can learn a thing or two from those who have come before them (Source: Getty)

An increasing amount of high-profile, international companies which are listed on Aim have ambitious vision for growth and are seeking advice on the best to go about this.

In many cases, having your sights set on growth may lead to frequently undertaking acquisitions and investments. Growth-seeking, Aim-quoted companies can draw a number of insights from corporate manoeuvres other companies are undertaking when they are going through more difficult times, especially bold ones such as taking on debt re-financing arrangements for example.

Watching and learning from other firms' corporate manoeuvres will give companies a clearer idea as to the benefits and drawbacks: taking the example of where a refinancing agreement has just been completed, a company will want to avoid a drop in broker ratings and target prices at all cost, as this will likely send the company's share price plummeting. Removing or avoiding restrictions which are typical of bank loan-based financing structures is a goal that Aim companies should always take into consideration.

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Aim offers flexibility in its regulatory requirements, market capitalisation, and financial reporting, yet Aim companies like main market companies must bear in mind the responsibilities that they have to shareholders as well as the market as a whole. In some circumstances, raising funds from banks or other lenders may genuinely be most suitable option even despite the possibility of attached restrictions.

Aim is undoubtedly a growth market – £4bn was raised through secondary listings in 2015 – but Aim companies should always seek appropriate advice on what finance structure will best suit their needs, as this can vary greatly.

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Where Aim-listed companies have undergone refinancing arrangements, it is worth reflecting on how they have been handled with regard to investor relations. There are many ways of helping a company to realise its potential; for example, removing restrictions can provide a company with a capital structure that is appropriate for its long-term growth ambitions.

Companies need to take it upon themselves to communicate to shareholders why and how financing arrangements benefit various stakeholders – keeping these lines of communication open are important in maintaining trust. Furthermore, thorough justifications should be provided in order to maintain strong investor relations and confidence following major transactions.

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Frequent and positive communication is particularly important for Aim companies as Aim investors often show keen interest in a company's vision and in providing assistance additional to that of a financial nature, such as personal experience and expertise.

Aim companies should continuously assess and reflect on their ambitions for growth. Though expert guidance should always be sought, relevant insights can be drawn from companies that have effectively acted on their visions for future growth.